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Falling occupancy levels in London are helping keep room rates static as the city feels the effects of global terrorist activity and fallout from Brexit.
According to the latest Hotel Bulletin from HVS, AlixPartners and AM:PM, London showed its sixth consecutive quarter year-on-year decline.
The capital also saw a 2 per cent decline in RevPAR compared with Q2 2015 with average room rate “failing to increase” for the second consecutive quarter.
Despite the drop in occupancy HVS chairman Russell Kett said the future for London is still positive.
“While this is significant in the short term, London is, and will remain, a huge magnet for inbound tourism... even when taking account the new hotels in the pipeline and the potential impact of the Brexit implementation causing economic wobbles,” said Kett.Across the UK the picture was more varied, although with overall demand sluggish average RevPAR growth only reached 2 per cent.Performance of hotels across the 12 UK cities reviewed varied significantly in Q2. Birmingham was top with RevPAR growth of 16 per cent, while hotels in Bath saw RevPAR up 11 per cent year-on-year on the back of a boost in international tourists.Newcastle recorded a 4 per cent RevPAR decline, as is saw the effects of a 10 per cent increase in hotel supply over the past 12 months.
Aberdeen saw RevPAR decline 24 per cent year-on-year as hotel occupancy continues to suffer from the city’s exposure to the oil and gas industry. If predictions that oil prices will continue to fall are correct, this will further suppress demand for the city’s hotels.Kett added: “Performance has always been very location-driven, with localised supply and demand issues having an impact on hotels’ operating performance. UK-wide averages tend to hide these fluctuations and even the performance within an individual city can vary quite markedly from hotel to hotel," he added.
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